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China's targeted corporate shopping spree to continue, especially in Europe

Posted On: Jul 17, 2020   |   Posted By: Bruegel

China's targeted corporate shopping spree to continue, especially in Europe

China's enthusiasm for overseas acquisitions waned in 2019. The series of negative economic shocks, from the US-China trade war to the tightened regulation of shadow banking, made financing of certain economic activities much tougher, including outward foreign direct investment. The worsening of the domestic and international environments took a toll on China's business sentiment, cooling corporates' interest and ability to expand overseas, especially through purchases of foreign companies. As if this were not enough, in early 2020 China took another unprecedented hit from the coronavirus outbreak. Heightened US-China tensions suggest that the post-pandemic environment could become harsher for Chinese investors who are considering buying companies overseas.
Does this mean that China is retreating from mergers and acquisitions overseas? It may look like it when observing headline M&A figures, but the devil is in the details.
After all, the economic incentives behind China's outbound foreign direct...

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